Oilfield services giant Schlumberger Ltd. on July 24 outlined plans for deeper spending cuts after recording a $3.7 billion charge and a second straight quarterly loss on thousands of job cuts and a pipeline outage in Ecuador.
The large loss capped second-quarter reports from U.S. oilfield services providers that laid bare the damage wreaked by the coronavirus crisis. Producers cut spending about 40% this year as energy prices and demand sank on pandemic-related shutdowns.
Schlumberger has cut some 21,000 jobs, a fifth of its workforce, amid the steep drop in activity. Second quarter charges included $1.02 billion for severance costs, $977 million for asset impairments, and $730 million on Latin America projects, where a landslide disrupted a major customer.
Although crude prices have recovered from the historic declines in March and April, they are down around 33% for the year. Schlumberger plans to cut another $300 million from this year's spending, bringing total cuts to a 45% decrease from last year.
A COVID-19 resurgence could upset the company's outlook for a near-term normalization of oil prices, CEO Olivier Le Peuch said in a statement. He did not offer an earnings outlook for the rest of the year.
Schlumberger, which is continuing to restructure to adjust to the price crash, said North American revenue fell to $1.18 billion in the second quarter, less than half of what it was a year earlier, with only slightly better conditions expected in the current quarter.
Conditions are set "for a modest frac completion activity increase in North America, though from a very low base," Le Peuch said, referring to work to complete shale oil wells.
Schlumberger stock was down slightly at $19.23 per share in early trading on the New York Stock Exchange. Wall Street praised the spending cuts.
"Hefty cost reduction efforts drove much healthier than anticipated [adjusted] earnings results," wrote Tudor, Pickering, Holt & Co. analysts in a note.
The world's largest oilfield services provider reported a net loss of $3.43 billion, or $2.47 per share, for the second quarter, compared with a profit of $492 million, or 35 cents per share, a year earlier.
Excluding charges, the company earned 5 cents per share.
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